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Income Tax Calculator

Income Tax Calculator

Income Tax Calculator

Table of Contents

What is the Income Tax Calculator?

An income-tax calculator is an online application that assists in calculating taxes depending on a person’s income. Individuals who fall into the taxable income category must pay tax on a portion of their net annual income. Income tax can be paid in two ways: as tax deducted at source when a monthly wage is disbursed, or through the Central Board of Direct Taxes’ income tax returns portal (CBDT). Individuals must pay their prescribed dues on any incomes obtained from other sources, which is why the opportunity for online tax payment exists.

How to Use the Online Income Tax Calculator?

Follow the below-given steps to use the tax calculator:

  • Select the tax year for which you wish to compute the tax.
  • Select your age in the next field. As previously stated, income tax rates in India vary according to age categories.
  • Then, select the ‘income field.’ Give specifics about your gross pay (monthly or yearly salary paid without any deductions). You must also fill in other information, such as annual income from other sources, such as rental income, and annual interest paid on a house loan for both self-occupied and let-out properties.
  • Next, fill in the specifics of various deductions, such as Section 87A, 80C, 80CCD (1B), 80D, 80G, 80E, 80TTA, 80TTB, and 80GG fundamental deductions. Also, include information on the interest rate on a student loan and the interest rate on savings account deposits.
  • Provide the details of the HRA exemption, such as base pay, DA, HRA, and total rent paid per year, in the next step.
  • Finally, choose if you live in a metropolis and press the calculate button to find out how much tax you owe.

Important Terms and Definitions in Tax Calculation

  • Assessment Year: An assessment year is when your income from a previous fiscal year is evaluated in the next fiscal year.
  • Financial year: The period from April 1st of the current year to March 31st of the following year is known as the financial year. This is the time frame in which you must gather all of your paperwork and submit your investment proofs.
  • Previous Year: The financial year that precedes the assessment year that follows. Your current-year earnings are evaluated the next year (assessment year).
  • Deduction: Based on Section 80 and Chapter VI-A, it is a decrease in total taxable income. You can get a tax deduction for some types of spending, such as investing in life insurance plans and paying your children’s college fees.
  • Exemption: A set amount is deducted from gross total income before tax is calculated. Sections 10 and 54 both provide exemptions. Exemptions include interest from tax-free bonds and wage components such as LTA.

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